Features

Jump-starting a stalling global economy

The global economic landscape still remains very bleak. In 2009, world per capita income is expected to decline, export growth and capital inflows will fall, and borrowing costs for developing countries will rise as contagion spreads from the major economies across the rest of the globe. The United States dollar is resuming its decline, with a possible hard landing in 2009.

The world economy is mired in the most severe financial crisis since the Great Depression. DESA’s World Economic Situation and Prospects (WESP) reports of 2006, 2007 and 2008 had already forewarned of the risks of this scenario. All factors analyzed in those reports - such as the predicted bursting of the housing bubble - have now played out and have thrust the world economy into recession.

WESP 2009 calls for deep reforms of global financial system

Presenting WESP 2009 to a global audience in Doha last month, Rob Vos, Director of DESA’s Development Policy and Analysis Division, commented that “we have seen extraordinary measures to deal with the crisis”, which include $11 trillion in public funds committed so far and some coordinated monetary responses. “But more and even bolder action is now required,” he warned.

Specifically, the WESP calls for deep reforms of the global financial system to prevent a recurrence of the crisis, including stronger regulation of financial institutions, adequate international liquidity provisioning, an overhaul of the international reserve system and a more inclusive global economic governance.

According to the WESP’s baseline scenario, world output would grow at a meager 1 per cent in 2009, compared to 2.5 per cent in 2008 and global growth rates of between 3.5 and 4 per cent in the preceding four years. The 2009 projection includes a decline in output of 0.5 per cent in developed countries, along with growth of 5.3 per cent in the transition economies and 4.6 per cent in the developing world.

Under a more optimistic scenario, taking into account a fiscal stimulus of between 1.5 and 2 per cent of gross domestic product (GDP) of the major economies and further interest-rate cuts, developed economies could post a 0.2 per cent rate of growth, and the developing world would surpass 5 per cent growth, the economists calculate.

But given the great uncertainty prevailing today, a more pessimistic scenario is possible. If the present credit squeeze drags on and confidence in the financial sector is not restored in the coming months, developed countries could slide into a deep recession, causing world output to fall and GDP growth in the developing world to plummet to 2.7 per cent. Such a dangerously low growth rate would compromise the ability of countries to sustain poverty reduction efforts and social and political stability. The poorest would thus suffer most from the crisis.

Enhance international policy coordination

The report has noted that crisis management moved slowly in 2008 with aggressively expansive monetary policy in the United States during the first half of the year in an attempt to stave off a recession while European central banks maintained a tightening stance in the face of inflation.

This mismatch between US and European policies is also typical of the lack of policy coordination during the boom years. At that time, growth was strong and the over-extension of credit in the US and over-accumulation of savings in surplus countries could have been countered with less pain and more room for manoeuvre than at present.

To shore up weaknesses in monetary and financial systems which have led to the extraordinary economic and social damage from the downturn and in order to prevent similar crises from happening again, DESA economists recommend a broad range of steps including: a fundamental revision of the governance structure and functions of the International Monetary Fund (IMF) and World Bank for enhanced international policy coordination and more inclusive participation of major developing countries. They also call for fundamental reforms of existing systems of financial regulation and supervision to stem past excesses.

Additionally, a reform of the present international reserve system would be needed, away from the almost exclusive reliance on the US dollar and towards a multilaterally backed multi-currency system. Finally, reforms of liquidity provisioning and compensatory financing mechanisms would be necessary, backed, among other things, by better multilateral and regional pooling of national foreign exchange reserves, and avoiding onerous policy conditionality.

National economies remain inter-linked

The WESP also analyzes in detail the evolution of the global financial crisis during 2008 and the more fundamental factors that led to its build-up. It further assesses the impact of the crisis on global economic activity, especially in developing countries.

The synchronized slowdown in both rich and poor countries is further evidence that the belief - until recently widely held - that developing country growth would have been ‘decoupled’ from that in the United States and Europe was dangerously misleading. The national economies of the world, in fact, remain inextricably linked. The report also reviews the policy actions taken so far across the world in response to the global financial crisis.

The report recommends more forceful fiscal policy stimuli be taken in an internationally concerted manner in order to prevent the world economy from falling into a much deeper and more prolonged recession. The WESP further details a number of more fundamental reforms to the international monetary and financial system that are needed to reduce risks of a recurrence of such a devastating crisis in the future.

United Nations connects to civil society in real time

For the United Nations maintaining a close relationship with civil society organizations (CSOs) is an integral part of ensuring that its work reflects the will of “we the peoples,” as foreseen in the Organization’s charter. As Under-Secretary General Sha Zukang points out, “from the very beginning, civil society has played a critical role in major UN conferences and summits. The effective cooperation between civil society and the UN, especially with our Department of Economic and Social Affairs, was vital to the success of those conferences – and to the value of their outcomes.”

New software for connecting to civil society

A new civil society participation database named iCSO facilitates interactions between civil society organizations and DESA. The database provides online registration for CSOs, eases the application procedure for consultative status with the Economic and Social Council (ECOSOC) and helps those non-governmental organizations (NGOs) that are already accredited to the Council to submit their quadrennial reports and to designate representatives to the United Nations. In the past, these processes would have required extensive correspondence, painstaking filing and dedicated administrative staff time. Anyone who wished to find out more about particular civil society organizations, especially those organizations that do not have significant websites of their own, would face a major research undertaking.

Instead today, by simply accessing iCSO through the Internet, users can search through a database of more than 12,000 organizations to find out more about the activities of these, which meetings they participate in and their status of United Nations accreditation. Currently, iCSO includes organizations in the areas of sustainable and social development, advancement of women, financing for development, forests and public administration.

In time, iCSO may come to encompass an even broader range of thematic areas of the United Nations. Additionally, iCSO is expected to transform and modernize DESA’s relationship with NGOs, releasing staff time from responding to routine queries and physically processing NGO applications towards more substantive activities to enhance DESA’s interaction with civil society.

An old relationship

DESA’s relationship with NGOs through ECOSOC is an old one, which dates back to the late 1940s. The first time that NGOs took a role in formal UN deliberations was through ECOSOC in 1946. Since 1946, the number of NGOs which have consultative status with the Council has mushroomed from 41 to some 700 by 1992 and finally some 3187 today.

Article 71 of the UN Charter authorized ECOSOC to make suitable arrangements for consultation with NGOs. Civil society’s relationship with ECOSOC is governed today by ECOSOC resolution 1996/31, which outlines the eligibility requirements for consultative status, rights and obligations of NGOs in consultative status, procedures for the withdrawal or suspension of consultative status, the role and functions of the ECOSOC Committee on NGOs, and the responsibilities of the UN Secretariat in supporting the consultative relationship.

Consultative status is granted by ECOSOC upon recommendation of the ECOSOC Committee on NGOs, which is comprised of 19 Member States. There are three categories of status: general, special and roster consultative status. In addition to the Consultative Status with ECOSOC, NGOs might have obtained other accreditations in the economic and social area. Some of these were temporary accreditations for a particular conference that are no longer valid.

Which organizations are eligible?

Consultative relationships may be established with international, regional, sub-regional and national non-governmental, non-profit public or voluntary organizations. NGOs already affiliated through consultative status with another international organization may be admitted to consultative status with ECOSOC provided that they can demonstrate that their programme of work is of direct relevance to the aims and purposes of the United Nations. In the case of national organizations consultation with the Member State concerned is required.

To be eligible for consultative status, an NGO must have been in existence (officially registered with the appropriate government authorities as an NGO/non-profit) for at least two years, must have an established headquarters, a democratically adopted constitution, authority to speak for its members, a representative structure, appropriate mechanisms of accountability and democratic and transparent decision-making processes.

The basic resources of the organization must be derived in the main part from contributions of the national affiliates or other components or from individual members, rather than from government budgets. Organizations established by governments or intergovernmental agreements are not considered NGOs.

General, special and roster status

There are three categories of status of NGOs with ECOSOC: general consultative status, special consultative status and roster status.

General consultative status is reserved for large international NGOs with a broad geographical reach whose area of work covers most of the issues on the agenda of ECOSOC and its subsidiary bodies.

Special consultative status is granted to NGOs which have a special competence in, and are concerned specifically with, only a few of the fields of activity covered by ECOSOC. These NGOs tend to be smaller and more recently established.

Organizations that apply for consultative status but do not fit in any of the above categories are usually included in the roster. These NGOs tend to have a rather narrow or technical focus. NGOs that have formal status with other UN bodies or specialized agencies such as FAO, ILO, UNCTAD, UNESCO, UNIDO, or WHO, among others, can be included on the roster status. The roster lists NGOs that ECOSOC or the UN Secretary-General considers to make “occasional and useful contributions to the work of the Council or its subsidiary bodies.”

Participation in international conferences

NGOs in general consultative status, special consultative status and on the roster that express their wish to attend relevant international conferences convened by the United Nations and the meetings of the preparatory bodies of the said conferences can as a rule be accredited for participation. Other NGOs wishing to be accredited may apply to the secretariat of the conference for this purpose.

Future interaction with civil society

The iCSO database automates many of the routine tasks and queries that are involved in the many stages of the accreditation process, and facilitates the information gathering by government representatives. While the database itself cannot speed up the accreditation process, which depends on the quality and timeliness of information provided by the NGOs, as well as on the deliberations of the NGO Committee, the database does serve to free up staff and delegate time for the more substantive and political issues involved in the granting of consultative status with ECOSOC.

Nevertheless, even in the short term, the growth path of new applications of NGOs for consultative status can be expected to shift up significantly. All in all, iCSO is expected to strengthen DESA’s relationship with civil society.

Climate Change Conference lays foundation for Copenhagen deal

At the end of the two-week United Nations Climate Change Conference in Poznań, Poland, on 12 December, UNFCC Executive Secretary Yvo de Boer said that “the main goal of delivering practical results on the road to Copenhagen 2009 had been achieved”. Parties had agreed on a work programme that would lead to intensified negotiations next year. Of critical importance to developing countries was the launch of the Adaptation Fund and a key event was a ministerial round table on a shared vision on long-term cooperative action on climate change.